Observers say the federal government should consider an incentivizing approach rather than a punitive one
Better housing affordability in Canada will not come about as a result of higher transfer taxes and penalties, according to the latest recommendations made by a federally-appointed expert panel.
In their analysis of the Canada-British Columbia Expert Panel’s calls to action, industry observers Murtaza Haider and Stephen Moranis agreed with the group’s assessment that “market-based solutions” such as homeowner taxes will not facilitate greater ownership access and affordability.
Instead of such levies, Haider and Moranis suggested the implementation of “tax incentives to support those developing social housing,” and the removal of preferential tax treatment for home owners.
“For decades, government policies had been targeted at encouraging homeownership. However, such approaches have treated renters less favourably,” the duo wrote in their column for the Financial Post. “The panel recommends a more equitable treatment of renters and owners in the tax system,” which can be done by eliminating policies such as the Homeowner Grant in BC.
Read more: MEI: Housing measures meant to improve affordability stoked the fire instead
Lessons can be gleaned from the policy environment before the 1990s, which was characterized by the federal government’s much stronger focus on building community housing “at levels much higher than observed recently.”
Ramping up this pace can help offset the sustained demand fuelling sky-high prices in the largest markets.
For instance, “in Metro Vancouver, known for steep housing price escalation, housing construction has remained between 10,000 to 25,000 units per year over the past three decades, even when the region’s population has continued to increase,” Haider and Moranis said.
“Then, there is the mismatch between what is being built and what is needed,” they added. “The bulk of recent construction comprises condominiums, which does not address the shortage of low-rise (e.g., detached, semi-detached) housing. The result is a sustained and fast escalation of low-rise housing prices in the Vancouver area.”
However, accelerating the development and deployment of new supply should not come at the expense of compromising industry standards, the observers stressed.
“Instead, the goal should be to have transparency in planning processes along with guaranteed maximum approval times,” Haider and Moranis said. “Without clarity on approval timelines, builders and developers would spend months and years pursuing rezoning applications while the scarcity of new housing continues contributing to faster price appreciation.”
